Papers & Reports

This article assesses the long-term effects of President Trump’s April 2025 “Liberation Day” tariffs and finds that while unreciprocated tariffs could modestly benefit U.S. welfare by reducing the trade deficit and offsetting income taxes, reciprocal retaliation would generate significant welfare losses. The authors derive an optimal unilateral tariff of 19%, uniform across all partners and based on the overall trade deficit—not bilateral imbalances—highlighting a major design flaw in the USTR’s approach. If trading partners retaliate optimally, U.S. welfare could fall by up to 3.8%, and global employment could shrink by 1.1%.

This article argues that Canada must adopt a bold and multifaceted strategy to counter the existential economic and geopolitical threat posed by a second Trump administration. Faced with U.S. protectionism, populist economic nationalism, and expansionist instincts, the piece calls for Canada to move beyond traditional retaliatory tariffs and WTO complaints. Instead, it proposes a resilience-centered approach that includes diversifying trade through initiatives like a new North Atlantic Free Trade Area or even unilateral liberalization; strengthening internal commerce and transportation infrastructure; and pursuing military modernization and urban renewal. The article further advocates for using Crown Corporations and unconventional monetary tools to stabilize investment and the Canadian dollar, while reinforcing the social safety net to maintain domestic cohesion in a turbulent global trade environment.

This article reconciles the apparent contradiction between product-level findings of full tariff pass-through and firm-level evidence of price adjustments during the US-China trade war. Using detailed customs data, it reveals that high-priced Chinese exporters reduced their pre-tariff prices in response to U.S. tariffs, while lower-priced firms were more likely to exit the U.S. market altogether. This selective market attrition and pricing behavior results in full pass-through at the product level, even though individual firms respond heterogeneously. The analysis underscores how tariff impacts are shaped by firm-level characteristics, with market exit masking incomplete pass-through among remaining exporters.

This article analyzes the spillover effects of the US-China trade war on Brazil’s labor market and finds that Brazilian regions more exposed to China’s retaliatory tariffs against US exports experienced relative gains in formal employment and wage income, driven by increased exports to China. Conversely, US tariffs on Chinese goods had no measurable effect on Brazilian labor markets. The findings illustrate how bilateral trade conflicts can create asymmetric global labor market responses, benefiting third-party countries through redirected trade flows.

This policy brief examines the growing transatlantic divide in responses to China’s export overcapacity, particularly in sectors critical to economic growth and national security. Triggered by concerns that Chinese industrial subsidies—not comparative advantage—are driving export success, the U.S. and EU have adopted divergent strategies. While the U.S. has embraced unilateral trade measures, most dramatically under President Trump’s decision to impose a 145 percent tariff on Chinese goods, the EU continues to emphasize compliance with global trade rules. The brief explores how these differing approaches reflect broader contrasts in trade and industrial policy, and considers the potential for coordinated action. It argues that the EU is well-positioned to lead efforts within the rules-based trading system and should keep the door open for future U.S. alignment, aiming to address Chinese overcapacity through collective pressure rather than fragmentation.

This policy briefing by the Peterson Institute for International Economics (PIIE) assesses the fiscal and macroeconomic consequences of universal U.S. tariff increases under President Donald J. Trump’s proposed trade policy. Using a global economic model, the briefing estimates that a 15 percentage point tariff on all imports could raise $3.9 trillion in federal revenue over 2025–2034 if there is no foreign retaliation, but this gain would be reduced to $3.2 trillion after accounting for negative economic impacts, and further down to $1.5 trillion if trading partners retaliate. Notably, higher tariffs do not guarantee higher revenue; a 20 percentage point increase results in only $791 billion in net gains due to amplified economic damage and retaliation. Across all scenarios, the United States would face lower GDP, investment, employment, and real wages, alongside higher short-term inflation. Sectors most exposed to export markets—agriculture, mining, and manufacturing—would bear the brunt, especially if foreign retaliation targets U.S. exports. The briefing underscores the trade-off between revenue generation and economic harm, warning that broad-based tariffs risk undermining long-term economic health even as they increase government receipts.

This article argues that the WTO has become irreparably dysfunctional and should be retired as a multilateral institution. Once hailed as a superior successor to GATT with its Appellate Body celebrated as an antifragile mechanism for resolving trade disputes, the WTO has failed to adapt its rules to modern economic realities and has become increasingly ineffective at enforcing its own legal framework, particularly in the face of growing reliance on national security exceptions and the collapse of its adjudicative functions. Applying Taleb’s concept of antifragility, the article contends that the WTO no longer strengthens under stress but instead has become fragile and inert, unable to innovate or govern the evolving global trade environment. It concludes that the WTO's institutional decline is beyond reform, and that the international community should move toward new structures better equipped to serve the demands of contemporary global trade.

This article examines the emerging “tax decluttering movement,” driven by global actors such as the OECD and European Union, which encourages countries to repeal or streamline their domestic anti-abuse tax rules in light of the new global tax agreement negotiated in 2021 by over 140 countries. While the push for decluttering is based on the claim that national rules are now redundant or overly burdensome, the article stresses that the multilateral regime remains untested and incomplete. It introduces an analytical framework to understand the movement, highlighting a convergence of interests among influential actors—including international organizations, regional blocs, and corporate stakeholders. The article explores the political economy implications of tax decluttering, particularly how it reshapes the distribution of tax lawmaking authority between national and transnational levels, intensifies institutional competition among global tax bodies, and alters the strategic calculus of states competing for investment and geopolitical influence. It concludes with a cautionary stance, arguing that premature decluttering carries significant risks, and offers practical guidance for legislatures navigating this evolving tax policy landscape.

This article explores how the advent of global minimum taxes transforms the foundational assumptions of international corporate tax policy, shifting the focus from whether corporate income will be taxed to which governments will collect the tax, and at whose expense. Historically, the possibility that a corporation might avoid income taxation altogether was central to tax planning and policy concerns. In contrast, the current global tax landscape, driven by frameworks like Pillar Two, increasingly ensures that corporate profits will be taxed somewhere, if not immediately, then eventually. This reorientation elevates questions of cross-border equity and wealth distribution, bringing to the forefront the role of corporate taxation as a mechanism for international redistribution. The article argues that under this new paradigm, corporate income taxes should be understood as tools for reallocating global wealth among nations, thereby requiring normative analysis that explicitly accounts for international distributive justice and fiscal sovereignty. 

This article examines the IMF’s evolving analysis of economic spillovers since 2011, emphasizing why international corporate taxation has become a key concern. Initially focused on the external effects of the five largest economies—China, the Euro Area, Japan, the UK, and the US—the IMF’s spillover reports later adopted a thematic lens to highlight issues with cross-border significance. The prominence of international taxation in these reports stems from its implications for macroeconomic stability and the rising global attention on multinational tax avoidance. The article underscores how these concerns have been elevated in multilateral policy dialogue to promote coordinated international responses.